Health Information Management

News: GAO report says more effort needed to reduce RAC target areas

CDI Strategies, April 15, 2010

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The Government Accountability Office (GAO) offered mixed reviews of CMS’ handling of the Recovery Audit Contractor (RAC) demonstration program, according to a report released March 31. While the report addressed only the demonstration project years 2005-2008, it did assess CMS’ ability to resolve some of those early concerns in its permanent national RAC program.

Although the GAO says CMS “did not address significant vulnerabilities representing $231 million in overpayments identified by the RACs during the demonstration project,” it listed several areas the agency did in fact attempt to improve.
“Based on lessons learned during the demonstration project, CMS took multiple steps in the national program to resolve coordination issues between the RACs and Medicare claims administration contractors,” the report states.
For example, open lines of communication were needed between CMS’ claims administration contractors on areas the RACs identified as vulnerabilities. CMS also learned that:
  • “the data warehouse used to store claims information for the RACs needed more capacity and utility
  • manual claims adjustment by claims administration contractors to recoup improper payments was burdensome
  • sharing paper copies of medical records between RACs and claims administration contractors when claims denials were appealed was difficult to manage”
In answer to the demonstration findings, the GAO says CMS improved its data collections and automated the claims-adjustment process. It added independent reviews by another CMS contractor to review the accuracy of RAC findings. CMS also established requirements to address provider concerns about service, such as having the RACs establish Web sites that will allow providers to track the status of a claim being reviewed.
The GAO findings may be interpreted as either good or bad news. Regardless, RACs received additional support in The Patient Protection & Affordable Care Act approved last month. The Act requires federal government agencies to expand the current recovery audit contractor (RAC) program to Medicaid and Medicare Parts C and D no later than December 31, 2010.
Although it is still unclear how this requirement will be met, it appears that the Medicaid RACs will be independent of the Medicaid Integrity Contractors (MIC), already in operation, according to a HealthLeaders Media report. Unlike the RACs, MICs do not receive a portion of the recoupment money.

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